The Evening Star MONDAY, OCTOBER 21, 1929. WOOL PROSPECTS.

Evening Star, Issue 20311, 21 October 1929, Page 8

The Evening Star MONDAY, OCTOBER 21, 1929. WOOL PROSPECTS.

The anxiety of the wool grower as to the course of the market this season has brought forth from Queensland a proposal that all the wool-producing countries combine to form a trust. This is unlikely . to be taken up with enthusiasm. The South African Minister of Agriculture, to whom the Queensland pastoralists’ proposal was referred by Mr Hertzog, has given the noncommittal reply that the most effective method for the producer to secure a voice in the disposal of his products is by co-operation. There is, however, a big difference between mere co-opera* tion and a combination to control a monopoly. One inevitable result of pro ducers attempting the latter is to provoke buyers into in kind. Everyone will remember what happened when the New Zealand daily producers established absolute control with fixed prices. The buying firms in Britain combined to boycott the New Zealand produce, and this form of co-operation on the part of the producers had to be speedily dropped. As -a matter of fact, some of those conversant with both sides of the matter, 'who admitted that the producer sometimes received unduly low prices without apparent justification but deprecated trying a price-fixing monopoly as a remedy, put forward the proposal that dairy-produce auction sales should be established in New Zealand on the same lines as prevail in the disposal of the wool clip, that being the method under which the law of supply and demand can operate fairly and freely. If other pastoralists are of the same opinion as their Queensland spokesman it would seem that they are of opinion that already the wool buyers constitute a ring, for his letter states that under • the present system of auctions the growers have to take what the combined buyers choose to give. Probably the origin of this statement may be found in the simultaneous easing of the demand by Bradford at colonial wool auctions noticeable in the past season or Bradford was of opinion that prices for raw wool were not justified by the prices obtainable for the commodity in its subsequent various stages of manufacture, right to the finished article. But the incorrectness of the suggestion that buyers act in concert to control prices was proved by the fact that Continental and other foreign buyers ignored Bradford’s lead, though it came from the oldest and most experienced section on the wool-buying benches. As events have proved, Brad--ford’s view was right. It was not mere caprice or even keen foresight, but was the result of the bitter experience of having made losses instead of profits on colonial wool purchases. Under such circumstances the financing of another season’s purchases becomes an increasingly difficult matter, and this

fact the Continental and foreign woollen industry is now realising. Under theso circumstances the ’explanation that a lower level of values is due to a buyers’ combine and should be met by a sellers’ ' combine can be brushed aside as childish. Besides, the wool trade is of such international scope that effective combines of either growers or buyers would be impracticable. New Zealand, of course, has shared in the anxiety of other countries as to the probable trend of the market in the approaching season. The fall in values at colonial auctions, as disclosed by the opening sales in Australia, was to some extent expected, and since then the question uppermost was whether those sales signified stabilisation on sound levels or whether the new range of prices was a prelude to a continued downward trend. The most experienced authorities deprecated the formation of any conclusion until the end of the October series of Sydney sales. Another week has still to run, but already the future is being regarded with more confidence. There is an undercurrent of feeling that bedrock has been reached, that prices are not likely to go any lower, and that any change the market may show will be in the direction of finning and not weakening. It may be as well to remind growers that the financing of the removal of the wool clip from one side of the world to the other is a huge undertaking, and its difficulty is not by any means lessened by the present state of the money market in Britain. It may be that the present system of the disposal of New Zealand’s wool may call for review in some of its details. If finance is at all cramped it may be necessary for buyers to have, time for the disposal of their earlier purchases so as to command funds to re-enter the market and make further purchases. The maintenance of full buying competition throughout the season by this means would clearly be in the growers’ interests, but it would entail a more prolonged selling season, possibly covering a full six months of the year. Apart from these considerations some such change would seem desirable, the alternative being separate rosters for the North and the South Islands, for the inclusion of additional selling centres in the dominion makes it increasingly difficult for the trade to transact its business in the allotted time.